M/S UNIBROS versus ALL INDIA RADIO

Citation: [2023] 14 S.C.R. 683 · Decided: 19-10-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Dismissed

Judgment (excerpt)

[2023] 14 S.C.R. 683 : 2023 INSC 931
683
CASE DETAILS
M/S UNIBROS
v.
ALL INDIA RADIO
(Civil Appeal No. 6895/2023)
OCTOBER 19, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
HEADNOTES
Issue for consideration: Arbitral award in question if in confl ict with 
the public policy of India and; whether a claim on account of loss of profi t 
is liable to succeed merely on the ground that there has been delay in the 
execution of the construction contract, attributable to the employer.
Arbitration and Conciliation Act, 1996 – s.34(2)(b) – “Public 
policy of India” – Appellant awarded work contract by the respondent 
– Disputes between the parties owing to the delay in work, referred to 
Arbitrator – Vide First Award, appellant was awarded sum towards 
loss of profi t (Claim No.12) – Award set aside by High Court, claims 
remitted to the Arbitrator – Second Award was passed maintaining 
the award for loss of profi t and interest to the appellant vide First 
Award – Respondent fi led petition u/s.34 for setting aside the second 
Award – Single Judge allowed the objection, rejected the appellant's 
claim inter alia holding that there was no suffi  cient evidence presented 
by the appellant to establish the claimed loss of profi t – Order affi  rmed 
by Division Bench:
Held: Second Award is equally in confl ict with the public policy of 
India as the First Award – While remitting Claim No.12 for reconsideration, 
the Arbitrator was warned not to be infl uenced by the factors that weighed 
in his mind while making the First Award – Arbitrator was also required to 
proceed only on the basis of the evidence – However, the Arbitrator went 
on to ignore the judicial decision of the High Court with impunity – The 
factors which weighed in the Arbitrator’s mind in the fi rst round and the 
second round are one and the same – To avoid any charge of being branded 
684 
SUPREME COURT REPORTS 
[2023] 14 S.C.R.
as a mirror image of the First Award insofar as Claim No.12 is concerned, 
the Second Award appears to have been expressed in language and form 
diff erent from the earlier one without, however, there being any change 
in substance – A judicial decision of a superior court, which is binding 
on an inferior court, has to be accepted with grace by the inferior court 
notwithstanding that the decision of the superior court may not be palatable to 
the inferior court – This principle, ex proprio vigore, would be applicable to 
an arbitrator and a multi-member arbitral tribunal as well, particularly when 
it is faced with a judicial decision (either u/s.34 or s.37 of the Act) ordering 
a limited remand – In the wake of authority of judicial determination made 
by the Courts of law, any award of an arbitrator or a tribunal that seeks to 
overreach a binding judicial decision does confl ict with the fundamental 
public policy and thus, cannot be sustained – Further, a claim for damages, 
whether general or special, cannot as a matter of course result in an award 
without proof of the claimant having suff ered injury – Arbitral award in 
question is patently illegal in that it is based on no evidence and is, thus, 
outrightly perverse; therefore, again, it is in confl ict with the “public policy 
of India” as contemplated by s.34(2)(b) – No merit in the appeal. [Paras 
13, 14 and 20]
Arbitration – Claim for loss of profi t arising from a delayed 
contract or missed opportunities from other available contracts – 
Claimant to substantiate the presence of a viable opportunity through 
compelling evidence demonstrating that had the contract been executed 
promptly, the contractor could have secured supplementary profi ts 
utilizing its existing resources elsewhere – Nature and quality of such 
evidence:
Held: Will be contingent upon the facts and circumstances of each 
case – However, it may generally include independent contemporaneous 
evidence such as other potential projects that the contractor had in the 
pipeline that could have been undertaken if not for the delays, the total 
number of tendering opportunities that the contractor received and declined 
owing to the prolongation of the contract, fi nancial statements, or any clauses 
in the contract related to delays, extensions of time, and compensation for 
loss of profi t – This list is not exhaustive and may include any other piece of 
evidence that the court may fi nd relevant – In adjudging a claim towards loss 
of profi ts, the court may not make a guess in the dark; the credibility of the 
685
evidence, 

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